Tesco announced a second drop running in underlying annual profits as it hopes that recent expansion into India and China can offset weakness in Europe. Reuters

Supermarket giant Tesco, Britain’s biggest retailer, announced a second drop running in underlying annual profits today as it hopes that recent expansion into India and China can offset weakness in Europe.

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The company, the world’s third-biggest supermarket group, said its trading profit dropped 6.0 percent to 3.31 billion pounds (USD 5.54 billion, 4.0 billion euros) in the year to late February, compared with its performance in 2012/13.

But annual profit after tax though soared to 974 million pounds from 28 million pounds.

However, the previous year’s figures had been hit when Tesco decided to close its under-performing US business.

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“Our performance in the (last) year was not where we had planned it to be,” Tesco said in its earnings statement.

“In the UK, we faced a weaker and increasingly competitive market in the second half,” said the group, which added that it had faced “difficult trading conditions” elsewhere in Europe.

“We have completed our exit from the US and established partnerships … (in China and India) which provide continued access to two of the world’s most exciting markets, consistent with a sustainable level of future investment.”